Profits Fall at Sotheby's

To offset the profit decline, art collectors of ArtKabinett social media network will see higher buyer's fees later this month.

The New York-based company’s net income fell to $66.1 million from $71.5 million a year earlier. It earned 96 cents a share, less than the average $1.10 estimate of four analysts. Quarterly revenue rose 2.4 percent, to $291.1 million.

William F. Ruprecht, Sotheby’s chairman and chief executive officer, said in a conference call that the profit drop was “skewed in a very significant part by the unprecedented level of single-owner sale events we had in 2011 which we were not so lucky to have in 2012.”

The auction house said it incurred a loss of $8.3 million, or 12 cents a share, from refinancing debt that will save it $5 million per year beginning in 2014. It said the comparison with the year-ago quarter was hurt by a $13.6 million tax benefit recognized in 2011.

Sotheby’s said it will increase its buyer’s commission for the first time in almost five years. Rival Christie’s announced a similar step earlier this month {see AK Files 25 February 2013}.

Buyers Charged More

Starting on March 15, Sotheby’s will charge mid-level buyers more, assessing 25 percent on the first $100,000 of the hammer price; 20 percent on the portion of the hammer price above $100,000 up to and including $2 million; and 12 percent on any amount above $2 million.

Previously, buyers paid 25 percent commission on the first $50,000, 20 percent between $50,000 and $1 million and 12 percent on any amount in excess of $1 million.

The new fees may go some way to addressing declining auction revenues. In 2012 auction commission revenues fell 11 percent to $622 million while private sales grew 10 percent to $75 million.

The results and commission increase were released today after the close of regular trading.